Another US bid to curb H-1B hiring


March 30, 2013

Some estimate the recommended wages would be up to 50% higher than the prevailing US wages.

March 30, 2013

Some estimate the recommended wages would be up to 50% higher than the prevailing US wages.

BANGALORE: The rhetoric against outsourcing and immigration in the US was expected die down after the presidential election. However, a section of US lawmakers is still trying to place immigration hurdles. And the latest bid is from US Senator Charles Grassley, who has introduced a new H-1B and L-1 Visa Reform Act 2013 that would require US companies to pay significantly higher wages to H-1B visa holders over their American peers with similar experience.

Some estimate the recommended wages would be up to 50% higher than the prevailing US wages. Given that Indian IT companies are the biggest users of this visa, the bill, if passed, could substantially increase the costs for these companies.

The bill, put together by a bipartisan group of senators, requires firms to make a good faith effort to hire Americans first over H-1B visa holders. But the biggest impact of the bill will be to make it cost prohibitive and burdensome to hire a foreign national.

In a statement issued last week, Grassley said, "Somewhere along the line, the H-1B programme got sidetracked. It was never meant to replace qualified American workers, but it was instead intended as a means to fill gaps in highly specialized areas of employment. When times are tough, like they are now, it's specially important that Americans get every consideration before an employer looks to hire from abroad."

Rahul Matthan, founding partner at law firm Trilegal, said that if the bill is passed, Indian IT companies would be challenged as their US clients rely heavily on their services for onsite work. "The bill restricts market access, and it's clearly protectionist, fulfilling a political charter."

Rakesh Prabhu, partner, immigration practice, at ALMT Legal, said the move would force IT companies to set up near-shore centres and hire more locals. "It chokes the provision of offering specialized services, playing down India's strength in IT services. They want to fill the gaps with the local talent pool," he said.

The proposed bill prohibits employers from advertising only to H-1B visa holders and outsourcing them to other companies. It has even increased administrative expenses per violation from $1,000 to $2,000 and from $5,000 to $10,000 for willful misrepresentation.

In 2010, the US had raised H-1B visa fees by as much as $2,000 per application and L-1 visas fees by $2,700 to fund its enhanced costs on securing its border with Mexico. India had moved the World Trade Organisation (WTO) against the visa fee hike, saying that it discriminates against employees of Indian companies who are on short-term contracts in America.

The pitch for protecting American jobs began after unemployment rates neared double-digit levels following 2008 sub-prime crisis. It reached a crescendo in the months leading up to the US elections in November last year. Though the US unemployment rate remains high at 7.7% now, the unemployment rate in the technology sector is said to be significantly lower.

Tech companies in the US have been lobbying to significantly increase the number of H-1B visas. The US government currently has a bill before it seeking to raise the H-1B cap from 65,000 to 1.15 lakh. How US lawmakers deal with these conflicting bills will have major implications Indian IT companies.

Courtesy: TNN